JPY Is the New VIX

The yen's exchange rate is calling the tune for global markets, which are dependent on central-bank liquidity.

Forget the VIX. The new fear gauge for markets is JPY. A strengthening of the exchange rate of the yen -- mainly against the U.S. dollar but also against the euro -- has been a warning flag for global markets from stocks to bonds to commodities lately.

The yen had its biggest rise, and the greenback consequently suffered its biggest decline in terms of the Japanese currency, in three years Tuesday. The yen moved "three big figures'' -- to under 96 to the dollar from 99 -- a move that is virtually unheard of. (A lower...